The trusts industry worldwide is a large, mature and increasingly competitive one.
ISOLAS has a long history in the provision of trust creation and management services in association with Fiduciary Trust Limited, part of the Fiduciary Management group of companies.
Trust legislation in Gibraltar is generally based on the UK’s trust law. The Trustee Act of Gibraltar is the main governing Act, which applies the provisions of the Convention on the Law Applicable to Trusts and their Recognition, with various additions, such as the establishment of asset protection trusts.
Gibraltar’s Registered Trusts Act 1999 allows a trust to be registered with the Registrar of Trusts at Companies House.
The Trustees Act creates the statutory framework, outlining the powers and duties of trustees and setting out provisions in relation to the investment of trust funds and the powers of the court.
Asset Protection Trusts (APT)
Gibraltar introduced asset protection trust legislation within the provisions of the bankruptcy law, rather than within fraudulent conveyancing laws, so that, for a creditor to commence an action in Gibraltar, they must commence an action under the bankruptcy law – and the standard of intent to defraud that must be met is much narrower and more difficult for a creditor to satisfy.
In order to commence an action under the bankruptcy law, it must be demonstrated that the settlor is resident or domiciled in Gibraltar or that an ‘act of bankruptcy’ has been committed in Gibraltar.
Private Trust Company
The recent introduction of legislation governing the operation of private trust companies provides greater legislative protection and certainty and encourages potential clients to consider Gibraltar as an attractive jurisdiction in which to establish a private trust company structure.
Gibraltar was at a disadvantage compared to other financial centres which had made specific provisions for private trust companies in the legislation.
The local legislation creates a voluntary system of registration which provides for those who choose to submit to a legal framework within which a private company can be officially established and operated.
The Purpose Trusts Act provides for the creation and enforcement of trusts whereby the trustees hold property on trust to carry out a specific purpose, which is not of a charitable nature.
A purpose trust must be established for purposes that are capable of being carried out and are sufficiently certain to be capable of being carried out. It is also a requirement that at least one trustee of a purpose trust must be a licensed trustee.
The legislation also sets up particular powers that a trustee will need and provides for the disapplication of the rule against perpetuities.
Trusts (Private International Law) Act 2015
This legislation is designed to attract substantial investment and deposited trust funds by providing a secure environment in which local law trusts are free from attack by foreign laws and foreign courts.
Firewall legislation sets out rules that limit the circumstances under which any foreign law can affect a local law trust and prevents the enforcement of foreign judgements that undermine these principles.
The legislation sets out the conditions under which Gibraltar courts will have jurisdiction over trusts and the extent to which foreign law will have an impact on local law trusts.